1 Nov 2012

Comet to be placed into administration

Electrical retailer Comet has become the latest high street casualty; the company is to enter administration next week with over 6,000 jobs now at risk.

The difficulties at the UK’s second largest electrical chain will be seen as a huge blow to the high street at a time when one in seven shops is lying empty.

The directors of the company will file the notice as early as next Thursday to a British court, with Deloitte lined up as a potential administrator,

The company ran into trouble ahead of Christmas due to trading without credit insurance to protect suppliers, meaning it had to pay cash up front for goods. Suppliers had tightened terms as the firm attempted to reach its peak stock requirement for the busy festive shopping period.

Comet was bought for a nominal £2 by the investment firm, OpCapita, earlier this year.

Shares rise

Comet’s collapse triggered big gains for shares in owners of rival chains with Dixons shares jumping 15 per cent on hopes its PC World and Currys chains will pick up business.

Comet had a poor festive trading last year with a 14.5 per cent drop in sales against the same period in 2010.

The restructuring specialist Deloitte has reportedly been lined up for the administration. It will begin by attempting to secure buyers for the company’s 240 stores. The administration could raise the prospect of a pre-Christmas rush for discounted stock as the administrator looks to wind down supplies and raise cash for creditors.

The failure follows on the heels of JJB Sports, which collapsed last month, and Clinton Cards, Blacks Leisure, Game and Peacocks, which have all recently folded.